From consumer behaviour to predictive analytics, Before we delve into the nitty-gritty of how companies regularly capture, store, and analyze large amounts of quantitative and qualitative data on their consumer base every day, let’s break this down in layman’s terms, Rule numero uno, Customer data is the engine.
In this day and age, the business of capturing and analysing data is proliferating and businesses are taking advantage of drawing insight from data and using it to increase sales and make informed decisions. People are building business empires solely on customer data, Business models are being built entirely on data. Long and short customer data is the new currency. It is big business. For small businesses how do they take advantage of this?
Let us look at ways companies capture data, what they do with the information and how you can also use the same techniques for your business purposes.
The consumer data that businesses collect can be categorized in to for main areas:
Personal data: This category includes personally identifiable information such as Social Security numbers and gender as well as nonpersonally identifiable information, including your IP address, web browser cookies, and device IDs (which both your laptop and mobile device have)
Attitudinal data: This data type encompasses metrics on consumer satisfaction, purchase criteria, product desirability and more.
Engagement data: This type of data details how consumers interact with a business’s website, mobile apps, social media pages, emails, paid ads and customer service routes.
Behavioural data: This category includes transactional details such as purchase histories, product usage information (e.g., repeated actions), and qualitative data (e.g., mouse movement information)
How do businesses collect your data?
Companies capture data from many sources and in diverse ways. Some collection methods are highly technical in nature, while others are more deductive (although these processes often employ sophisticated software).
According to Liam Hanham, data science manager at Workday “Customer data can be collected in three ways: by directly asking customers, by indirectly tracking customers, and by appending other sources of customer data to your own,” “A robust business strategy needs all three.”
The most obvious places to pull data are from consumer activity on your websites and social media pages, but there are some more interesting methods at work as well,
An example is location-based advertising, which utilizes tracking technologies such as an internet-connected device’s IP address (and the other devices it interacts with – your laptop may interact with your mobile device and vice versa) to build a personalized data profile. This information is then used to target users’ devices with hyper-personalized relevant advertising.
Does this sound familiar? This is what happens when you find yourself getting ads similar to your last search, you have just been schooled. Besides collecting information for business purposes, companies that sell personal information and other data to third-party sources have become commonplace. Once captured, this information is regularly changing hands in a data marketplace of its own.
What is the importance of collecting such data?
- To improve customer experience: Data enables companies, better understand a customer’s plight, needs and preferences so they can deliver better services to customers. Customers are the lifeline of any company when the customer is happy, the company thrives.
- To transform data to insights and into cashflow: Companies that capture data stand to profit from it. Data brokers, or data service providers that buy and sell information on customers, have risen as a new industry alongside big data. For businesses that capture large amounts of data, collecting information and then selling it represent opportunities for new revenue streams. For advertisers, having this information available for purchase is immensely valuable, so the demand for more and more data is ever increasing.
- To improve marketing strategies: data can help companies understand how consumers are engaging with and responding to their marketing campaigns, and adjust accordingly. This highly predictive use case gives businesses an idea of what consumers want based on what they have already done. Like other aspects of consumer data analysis, marketing is becoming more about personalization and businesses are taking advantage.
Give your business the chance to grow using data, and explore how to use it for business purposes.